Commercial Law Notes NICHOLAS SAADY

Contents INTRODUCTION ................................................................................................................................... 8

PROPERTY ............................................................................................................................................ 8

Meaning ............................................................................................................................................. 8

Types ................................................................................................................................................. 9

OWNERSHIP/POSSESSION .................................................................. Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Wrongdoer’s Property Rights (not covered in lecture) ............ Error! Bookmark not defined.

Finders ............................................................................................... Error! Bookmark not defined.

Transferring Personal Property ................................................... Error! Bookmark not defined.

Gifts ..................................................................................................... Error! Bookmark not defined.

BAILMENT .............................................................................................. Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Parties ................................................................................................ Error! Bookmark not defined.

Types of Bailment ............................................................................ Error! Bookmark not defined.

Essential Elements ........................................................................... Error! Bookmark not defined.

Comparison ....................................................................................... Error! Bookmark not defined.

Bailee’s Obligations ......................................................................... Error! Bookmark not defined.

Third Parties ..................................................................................... Error! Bookmark not defined.

Bailor’s Obligations ......................................................................... Error! Bookmark not defined.

Role of Contract Law in Regulating Bailment ............................. Error! Bookmark not defined.

Statutory Implied Conditions into Bailments ............................. Error! Bookmark not defined.

Jus Tertii............................................................................................. Error! Bookmark not defined.

Uncollected Goods Act 1995 (NSW) .............................................. Error! Bookmark not defined.

Sub Bailments ................................................................................... Error! Bookmark not defined.

Bailment on Terms .......................................................................... Error! Bookmark not defined.

Termination of Bailment ................................................................ Error! Bookmark not defined.

AGENCY ................................................................................................... Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Classifying Agents ............................................................................ Error! Bookmark not defined.

Before Creation ................................................................................. Error! Bookmark not defined.

Non Agency Circumstances ............................................................ Error! Bookmark not defined.

Factors towards and against Agency ............................................ Error! Bookmark not defined.

Creation .............................................................................................. Error! Bookmark not defined.

Authority – Nature/Scope of Agency ............................................ Error! Bookmark not defined.

Rights and Duties of Agents ........................................................... Error! Bookmark not defined.

Liabilities in Agency......................................................................... Error! Bookmark not defined.

Termination ...................................................................................... Error! Bookmark not defined.

Comparing Agency ........................................................................... Error! Bookmark not defined.

NEGOTIABLE INSTRUMENTS .............................................................. Error! Bookmark not defined.

Negotiable Instruments .................................................................. Error! Bookmark not defined.

Types of Instruments ...................................................................... Error! Bookmark not defined.

CHEQUES (NEGOTIABLE INSTRUMENTS) (not in exam) ............... Error! Bookmark not defined.

s 10(1) Cheques Act 1986 (Cth)....................................................... Error! Bookmark not defined.

Negotiability ...................................................................................... Error! Bookmark not defined.

Types of Cheques .............................................................................. Error! Bookmark not defined.

Crossing (Parallel Lines): CA ss 53-57 ......................................... Error! Bookmark not defined.

Cheque Essentials ............................................................................. Error! Bookmark not defined.

Holders ............................................................................................... Error! Bookmark not defined.

Financial Institutions’ Duties ......................................................... Error! Bookmark not defined.

Responsibility of Customer to Bank ............................................. Error! Bookmark not defined.

Bank and Payee (not contractual relationship) ......................... Error! Bookmark not defined.

BILLS OF EXCHANGE (NEGOTIABLE INSTRUMENTS) (BoA Act 1909) (not in exam)

................................................................................................................. Error! Bookmark not defined.

Definition: s 8 Bills of Exchange Act (Cth) .................................... Error! Bookmark not defined.

Negotiability ...................................................................................... Error! Bookmark not defined.

Characteristics .................................................................................. Error! Bookmark not defined.

‘A sum certain in money’ ................................................................ Error! Bookmark not defined.

Liability of Parties - Requirements ............................................... Error! Bookmark not defined.

Liability of Acceptor ........................................................................ Error! Bookmark not defined.

Liability of Drawer ........................................................................... Error! Bookmark not defined.

Liability of Indorser ......................................................................... Error! Bookmark not defined.

Holders ............................................................................................... Error! Bookmark not defined.

Discharge ........................................................................................... Error! Bookmark not defined.

GUARANTEES (NEGOTIABLE INSTRUMENTS) ................................ Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Elements ............................................................................................ Error! Bookmark not defined.

Rights and Obligations of Guarantors .......................................... Error! Bookmark not defined.

Rights and Obligations of Creditors.............................................. Error! Bookmark not defined.

Obligations of Principal Debtor ..................................................... Error! Bookmark not defined.

Indemnities ....................................................................................... Error! Bookmark not defined.

Construction of Indemnity Clauses ............................................... Error! Bookmark not defined.

Construction of Guarantees ........................................................... Error! Bookmark not defined.

Relationship with PPSA................................................................... Error! Bookmark not defined.

Enforcement ...................................................................................... Error! Bookmark not defined.

Discharge of the Guarantor ............................................................ Error! Bookmark not defined.

Statutory Remedies ......................................................................... Error! Bookmark not defined.

SECURITY INTERESTS OVER PERSONAL PROPERTY ..................... Error! Bookmark not defined.

Security .............................................................................................. Error! Bookmark not defined.

Liens (Categories of Security Interest) ........................................ Error! Bookmark not defined.

Other Liens ........................................................................................ Error! Bookmark not defined.

Pledge (Categories of Security Interest) ...................................... Error! Bookmark not defined.

Charges (Categories of Security Interest) ................................... Error! Bookmark not defined.

Basic Security Interests .................................................................. Error! Bookmark not defined.

PPSA Overview.................................................................................. Error! Bookmark not defined.

Included Transactions (Normal/Deemed Security Interests) Error! Bookmark not defined.

Excluded Transactions in the PPSA .............................................. Error! Bookmark not defined.

Categories of Collateral ................................................................... Error! Bookmark not defined.

PPS Leases ......................................................................................... Error! Bookmark not defined.

Attachment ........................................................................................ Error! Bookmark not defined.

Security Agreements ....................................................................... Error! Bookmark not defined.

Perfection .......................................................................................... Error! Bookmark not defined.

Priority ............................................................................................... Error! Bookmark not defined.

Determination of priority depends on: ........................................ Error! Bookmark not defined.

o Whether SI is perfected or unperfected ...................................... Error! Bookmark not defined.

o Time when interests arose or were perfected ............................ Error! Bookmark not defined.

First secured party prevails (s 55(2)) (first in registration not perfection) (Healy Holmberg v

Grant – NZ CASE) ................................................................................. Error! Bookmark not defined.

DEFAULT PRIORITY RULES ........................................................... Error! Bookmark not defined.

o Competition between 2 unperfected is determined by which security interest was attached

first (s 55(2)) ......................................................................................... Error! Bookmark not defined.

o Perfected security interest will defeat an unperfected (s 55(3)) . Error! Bookmark not defined.

o Competition between 2 perfected depends upon earliest of (s 55(4)(5)): Error! Bookmark not

defined.

a) Time financing statement is registered (s 55(5)(a)) .................... Error! Bookmark not defined.

NOTE: this may be before attachment but perfection will not occur until attachment also

occurs ................................................................................................... Error! Bookmark not defined.

b) Time security interest is perfected by control or possession (s 55(5)(b)) . Error! Bookmark not

defined.

c) Time security interest is temporarily perfected (s 55(5)(c)) ....... Error! Bookmark not defined.

NOTE: get time priority only if continuously perfected (s 55(6)) Error! Bookmark not defined.

NOTE: these default priority rules DO NOT APPLY to taking free interests Error! Bookmark not

defined.

o They can never be defeated (only are exceptions within each TF section) Error! Bookmark not

defined.

PMSI Priority Contests .................................................................... Error! Bookmark not defined.

RATIONALE = but for party C providing the collateral to A would B have access to this

collateral – if no, then it is a PMSI (would have no dealing otherwise) ............. Error! Bookmark not

defined.

Perfected PMSI takes priority over most other SIs irrespective of time they arise (SUPER

PRIORITY) if (s 62): ............................................................................... Error! Bookmark not defined.

Perfection by Control ...................................................................... Error! Bookmark not defined.

Perfection by Possession ................................................................ Error! Bookmark not defined.

Priority over Accounts .................................................................... Error! Bookmark not defined.

Exception to PMSI’s super priority is for security interest in an account held as original

collateral where non PMSI secured party (WHERE SI DOES NOT FIT IN s 14 PMSI DEFINITION)

registers their interest and provides new value for the SI ................. Error! Bookmark not defined.

Taking Free/Extinguishment Rules ............................................. Error! Bookmark not defined.

Special Topics ................................................................................... Error! Bookmark not defined.

Enforcement Rules ........................................................................... Error! Bookmark not defined.

Transitional Issues .......................................................................... Error! Bookmark not defined.

Other Notes ........................................................................................ Error! Bookmark not defined.

Amendment Demands ................................................................. Error! Bookmark not defined.

Formal request to secured party perfected by registration to either remove or amend their

entry (s 177) ......................................................................................... Error! Bookmark not defined.

o Often by grantor when obligations met or third party wishing to create a separate SI over

underlying collateral ............................................................................ Error! Bookmark not defined.

o MIRZAI ARTICLE FOR MORE INFO ................................................ Error! Bookmark not defined.

Suffix additions often in description of collateral in financing statement such as: ............ Error!

Bookmark not defined.

And all proceeds ........................................................................... Error! Bookmark not defined.

o Proceeds are often used to add to security – extra security ....... Error! Bookmark not defined.

And all future advances ............................................................... Error! Bookmark not defined.

And all associated intellectual property rights ............................ Error! Bookmark not defined.

EG: CAT 500 Tractor and all proceeds .......................................... Error! Bookmark not defined.

Seriously misleading defect will prevent perfection (s 164) ........ Error! Bookmark not defined.

Could 3rd party reasonably interpret the interest on register? ... Error! Bookmark not defined.

Title (ownership) does not go away with PPS .............................. Error! Bookmark not defined.

Wherever the act does not apply title is still supreme ................ Error! Bookmark not defined.

MUST BE TWO COMPETING SIs FOR PRIORITY RULES TO APPLY Error! Bookmark not defined.

EG: does not apply if car is stolen ................................................ Error! Bookmark not defined.

Cases ................................................................................................... Error! Bookmark not defined.

Waller v NZ Bloodstock (2006) .................................................... Error! Bookmark not defined.

FACTS = secured creditor had charge over all debtor’s property, lessor leased a horse to

debtor for 2 years, lessor did not register his interest in horse whilst secured party did .......... Error!

Bookmark not defined.

HELD = secured party had priority as it perfected ....................... Error! Bookmark not defined.

Re Maiden Civil (2013) ................................................................ Error! Bookmark not defined.

HELD = applied Re Giffen in ruling that title no longer counts only perfection under PPSA and

therefore QES’ unperfected interest was defeated by perfected FF .. Error! Bookmark not defined.

o OBITER = should be looking at foreign case law .......................... Error! Bookmark not defined.

Re Maiden (2013) .............................................................................. Error! Bookmark not defined.

Other Statutes and Perfection ....................................................... Error! Bookmark not defined.

SALE OF GOODS AND CONSUMER PROTECTION ............................. Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Overview of Elements ...................................................................... Error! Bookmark not defined.

Overview of Legislation .................................................................. Error! Bookmark not defined.

Elements Necessary for Act to Apply: [1] CONTRACT FOR SALE ............ Error! Bookmark not

defined.

Elements Necessary for Act to Apply: [2] GOODS MUST FALL WITHIN SoGA DEFINITION

............................................................................................................. Error! Bookmark not defined.

Terms: Conditions and Warranties .............................................. Error! Bookmark not defined.

Nemo dat quod non habet (no person gives what they don’t possess) .. Error! Bookmark not

defined.

Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] 2 All ER 105 Error! Bookmark

not defined.

M (car dealer) in floor plan agreement with finance company. Cars sold to FC but stays with

M. M can then sell cars, but has to pay FC back. M has financial difficulties. FC withdraws

agreement. But on that day, M sells to PMA all stock. FC sues to get back cars. .... Error! Bookmark

not defined.

HELD: PMA had good title (protected by s28) since he bought in good faith and without

notice, from M who had kept possession after selling. ....................... Error! Bookmark not defined.

o S 28(2) Buyer in Possession = buyer, has possession of goods (or docs of title), with consent of

seller transfers to 2nd Purchaser, who receives in good faith and without notice of previous sale

be as if buyer was mercantile agent entrusted by orig. owner. ..... Error! Bookmark not defined.

Robinson Motors Pty Ltd v Fowler [1982] Qd R 374 ................................ Error! Bookmark not defined.

P buys car with bad cheque from dealer. P takes poss of car and sells to F. Dealer sues F.

Error! Bookmark not defined.

HELD: F (protected by s28). ......................................................... Error! Bookmark not defined.

Notice: must be actual – not constructive. Failure to make inquiries relevant to “good

faith”. ................................................................................................... Error! Bookmark not defined.

Terms: Implied Terms..................................................................... Error! Bookmark not defined.

Terms: Further Implied Terms ..................................................... Error! Bookmark not defined.

Transfer from Buyer to Seller ........................................................ Error! Bookmark not defined.

Performance ...................................................................................... Error! Bookmark not defined.

Remedies for Seller .......................................................................... Error! Bookmark not defined.

Remedies for Buyer ......................................................................... Error! Bookmark not defined.

AUSTRALIAN CONSUMER LAW .......................................................... Error! Bookmark not defined.

Introduction ...................................................................................... Error! Bookmark not defined.

Application – Corporations ............................................................ Error! Bookmark not defined.

Application – The Crown ................................................................. Error! Bookmark not defined.

Application – Third Party (Accessorial) Liability ...................... Error! Bookmark not defined.

Application – Extraterritorial ........................................................ Error! Bookmark not defined.

ACL – Consumer Guarantees .............................................................. Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Application of ACL and SoGA .......................................................... Error! Bookmark not defined.

Application of the Act – Defining a Consumer ............................ Error! Bookmark not defined.

Definitions under the Act ............................................................... Error! Bookmark not defined.

Who is Protected? ............................................................................ Error! Bookmark not defined.

S 51 GUARANTEE AS TO TITLE ...................................................... Error! Bookmark not defined.

S 52 GUARANTEE AS TO UNDISTURBED POSSESSION ............... Error! Bookmark not defined.

S 53 GUARANTEE AS TO UNDISCLOSED SECURITIES ................. Error! Bookmark not defined.

S 54 GUARANTEE AS TO ACCEPTABLE QUALITY ........................ Error! Bookmark not defined.

S 55 GUARANTEE AS TO FITNESS FOR PURPOSE ....................... Error! Bookmark not defined.

S 56 GUARANTEE AS TO SUPPLY OF GOODS BY DESCRIPTION Error! Bookmark not defined.

S 57 GUARANTEE RELATING TO SUPPLY OF GOODS BY SAMPLE .......... Error! Bookmark not

defined.

S 58 GUARANTEE AS TO REPAIRS/SPARE PARTS ...................... Error! Bookmark not defined.

S 59 GUARANTEE AS TO EXPRESS WARRANTIES ....................... Error! Bookmark not defined.

SS 60/61/62 GUARANTEES RELATING TO SERVICES ................ Error! Bookmark not defined.

S 64 EXCLUDING LIABILITY ............................................................ Error! Bookmark not defined.

S 64A LIMITING LIABILITY IN PROVISION OF G/S ..................... Error! Bookmark not defined.

Remedies for Goods ......................................................................... Error! Bookmark not defined.

Action against Manufacturers ....................................................... Error! Bookmark not defined.

Remedies for Services ..................................................................... Error! Bookmark not defined.

ACL – Unconscionability...................................................................... Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Definitions ......................................................................................... Error! Bookmark not defined.

Accessorial Liability ........................................................................ Error! Bookmark not defined.

S 20 THE UNWRITTEN LAW ........................................................... Error! Bookmark not defined.

S 21 UNCONSCIONABLE CONDUCT ................................................ Error! Bookmark not defined.

S 22 INDICIA OF UNCONSCIONABILITY ........................................ Error! Bookmark not defined.

Application of the Indicia ............................................................... Error! Bookmark not defined.

Special Disadvantage and Case Law ............................................. Error! Bookmark not defined.

Remedies ........................................................................................... Error! Bookmark not defined.

ACL – Unfair Contracts ......................................................................... Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

[1] Is it a Consumer Contract? ....................................................... Error! Bookmark not defined.

[2] Is it a Standard Form Contract? ............................................... Error! Bookmark not defined.

[3] Is The Term Capable Of Being Construed As Unfair? .......... Error! Bookmark not defined.

[4] Is The Term Unfair? ................................................................... Error! Bookmark not defined.

[5] Does the term fit into one of the Unfair Term Examples? .. Error! Bookmark not defined.

[6] Remedies ..................................................................................... Error! Bookmark not defined.

ACL – Misleading and Deceptive Conduct ........................................ Error! Bookmark not defined.

A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is

likely to mislead or deceive (s 18(1)) .................................................... Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Person................................................................................................. Error! Bookmark not defined.

In Trade or Commerce .................................................................... Error! Bookmark not defined.

Engaging in Conduct ........................................................................ Error! Bookmark not defined.

Misleading and Deceptive............................................................... Error! Bookmark not defined.

Exclusion Clauses and Disclaimers ............................................... Error! Bookmark not defined.

Enforcement and Remedies ........................................................... Error! Bookmark not defined.

ACL – Remedies ..................................................................................... Error! Bookmark not defined.

Generally ............................................................................................ Error! Bookmark not defined.

Injunctions ......................................................................................... Error! Bookmark not defined.

Damages ............................................................................................. Error! Bookmark not defined.

Compensation Orders ..................................................................... Error! Bookmark not defined.

Questions ........................................................................................... Error! Bookmark not defined.

INTRODUCTION

All matters heard in Supreme Court

Various pieces of legislation govern transactions (ACL, NCCC, PPSA, SoGA)

Note the importance of contract law and overlaps with torts and equity/trusts

Governs commercial transactions (agreements and arrangements) between

professionals for goods, services and facilities

o Often looks at RIGHTS

o Concerns mainly merchants not consumers

Although consumers may often benefit

o Does not only relate to codes but also CL such as contract (bailment, guarantees)

Buzzwords = possession, dominion, conduct

PROPERTY

Meaning MAY be:

o Object OR

o Proprietary rights to that object

Characteristics:

o Relationships between humans/persons in relation to things

o Right to exclude others from doing something in respect to an object

‘…Much of our false thinking about property stems from the residual perception that

‘property’ is itself a thing or resource rather than a legally endorsed concentration of

things and resources’: Yanner v Eaton (1999) 201 CLR 351

‘To talk about property is to talk not about objects but about relations between

human beings or more accurately about relations between persons in relation to

things…private property must at least involve the right of the owner to exclude

others from doing something in respect of the object of ownership’ Felix Cohen

‘Dialogue on Private Property’ (1954) 9 Rutgers LR 357

Types Real = land/fixtures (things affixed to land) [immovable, unique, indestructible, likely

to appreciate] {rights in rem}

Personal = goods/chattels [impermanent, movable, temporal, fragile, often

depreciates, not unique or common] {rights in personam}

o Choses (French for ‘thing’) in possession = tangible, physical object (eg. Car,

book) [Torkington v Magee]

Ownership acquired through purchase or gift (Horsley v Phillips Fine Art)

In case of affixing one’s goods to another’s goods (eg. Motor into

other’s car) the overriding principle is original intention of owners

Where goods mixed without consent then proportioned

according to original shares and if cannot ascertain quantities

matter resolved in favour of non-consenting party (Indian Oil v

Greenstone)

o Choses in action = rights enforceable by law to procure payments of a sum of

money/recover damages for a wrong or non-performance of a contract (eg.

Cheques, bills of exchange)